The Tactical Traveler
A SPECIAL YEAR-END
BY JOE BRANCATELLI
This week: What will the business-travel landscape look like in 2005? Here are some thoughts, observations and conclusions about the state of life on the road after we return from the 2004 holiday break.
THE BIG SIX: Will Chapter 22 Become Chapter 66?
Your guess about the fate of The Big Six in 2005 is as good as anyone else's because it turns out only two opinions may actually matter. The bankruptcy-court judges in the United Airlines and US Airways cases are weighing extraordinary requests from the airlines: cancellation of their union contracts and the rejection of their pension-plan obligations. If either or both judges grant the requests, it will create a cascade effect that will force the remaining four "legacy" airlines to declare Chapter 11 and try the same gambits. If the judges reject the motions--or the two bankrupt airlines and their unions negotiate out-of-court agreements--then the remainder of the Big Six might be able to avoid Chapter 11 filings. Operationally, however, one thing is clear: No one is predicting a profit in 2005. Speaking of predictions, United chief executive Glenn Tilton claimed this month that the airline, now beginning its third year in bankruptcy, would exit by the summer of 2005. Of course, he also predicted that United would be out of bankruptcy late in 2003 and then in 2004. As for US Airways, a financing deal it arranged with a GE subsidiary requires it to exit bankruptcy by June, 2005.
ALTERNATE AGENDA: Southwest's Win in Chicago Will Shape the Year
A good portion of 2005 developments at the nation's low-fare carriers came into focus on December 16 when Southwest Airlines won the bidding for a huge chunk of the Chicago/Midway assets of bankrupt ATA Airlines. Southwest's bid, estimated at $117 million, bested a deal proposed by AirTran Airways. Although it still expects to launch new service from Chicago/Midway in 2005, Atlanta-based AirTran walks away with a breakup fee of about $3 million and will look elsewhere for expansion opportunities. The terms of the Southwest deal are not yet clear, but they seem like a huge operational departure for the 800-pound gorilla of no-frills flying. Southwest will not only get about half of ATA's Midway assets, it'll also code-share with ATA on many of its remaining flights and take what amounts to a controlling stake in the wounded carrier. … Among the other alternate airlines, Denver-based Frontier has given up on its bid to build Los Angeles as a secondary hub and will eliminate most of its remaining service there early in 2005. But a massive domestic cutback by United Airlines at its Denver hub may offer Frontier expansion possibilities closer to home. … Meanwhile, JetBlue Airways will likely defer most of its 2005 expansion plans until the summer of 2005 when it begins taking delivery of new 100-seat EMB-190 jets. The carrier says it will use the planes to "connect the dots" with nonstop service between cities it already serves.
AIRPORT REPORT: They'll Be Working on the Airports
It's hard to say that 2005 will be the year of airport construction--airports have been under almost constant renovation for security reasons since 9/11--but several major facilities will be undergoing major reconstruction in the year to come. At Atlanta/Hartsfield, for example, Delta's commuter carriers are about to begin a $20 million renovation of Concourse C. There will be new seating, carpeting and signage, new information displays, a new Delta Crown Room and covered passenger boarding area. The work is partially in response to Delta's decision to abandon its Dallas/Fort Worth operation and move many flights to Atlanta. The airline claims it will operate more than 1,000 flights a day there by the end of January. Other renovations of note in 2005: Los Angeles International may begin parts of an $11 billion remodeling in the spring. The first phase of the massive plan includes more gates for the international terminal and a consolidated rental-car center. … Meanwhile, design work is expected to begin on a $280 million expansion of Terminal B at Newark. That's the airport's primary international terminal. … In Japan, a $6.8 billion new airport is due to open in Nagoya in February. … And watch two political fights in 2005: At London/Heathrow, Star Alliance carriers are still arguing with airport managers over a plan to move them all to Terminal One. And airlines are jockeying for position at Madrid Barajas Airport. At the moment, the new Terminal Four will go to Iberia and other Oneworld partners, Terminal One will go to Spanair and the Star Alliance and Terminal Two will be assigned to SkyTeam. Spanair seems particularly unhappy.
COCONUT WIRELESS: Cashing Miles to Hawaii? There Should Be More Seats.
Longtime business travelers who prefer to use their frequent-flyer miles and frequent-stay points for Hawaiian holidays know that availability waxes and wanes with the airline industry's interest in flying to the islands. In 2005, the news should be good as several airlines add flights from the mainland. In February, for example, Northwest Airlines launches seasonal service from Anchorage to Maui and Honolulu. This is in addition to flights to Honolulu that Northwest began this month from San Francisco and Portland. … In May, Delta Air Lines begins nonstops from its Salt Lake City hub to Maui. … Meanwhile, a franchisee of Marriott is trying to get the old Kauai Coconut Beach Resort renovated and reflagged as the 311-room Courtyard Waipouli hotel. It was due to open on December 15, but the launch has been delayed until late January. Even that date is tentative, however. … And watch out for this one: Five hotels in Hawaii that fly the Sheraton flag have recently been sold by their Japanese owners. The new owner might put the properties--the Sheraton Maui and four Honolulu properties (the Royal Hawaiian, Moana Surfrider, the Princess Kaiulani and the Sheraton Waikiki)--in the hands of several hotel-management firms. That would seriously dilute the value of Starwood Preferred Guest points in Hawaii.
DOLLAR DOLDRUMS: No, It Won't Get Better Next Year
The dollar's plunge against the world's major currencies has temporarily halted, but experts think the greenback's decline will resume in 2005. Are you ready for the euro at $1.40 or even $1.50? The British pound at $2? The dollar buying less than 100 Japanese yen for the first time in more than a decade? Not to mention further erosion of the dollar's value against the Australian, New Zealand and Canadian dollars and the Swiss franc? Of course, monetary values are notoriously cyclical and fickle, but it's smart to assume that 2005 will be an ugly year for business travelers overseas. We'll face brutally high prices for hotel rooms, cab fares, meals and just about everything we have to buy in local currencies.
INTERNATIONAL ITINERARY: If They Fly It, Will You Buy It?
Is there anyone who really wants to fly nonstop to Bristol, England? How about Nagoya, Japan, or Hamburg, Germany? The big U.S. carriers sure hope so because they are starting new service to these cities and almost two dozen other international destinations in 2005. The driving factor isn't necessarily business-travel demand, however. Convinced they cannot compete against low-fare carriers at home, the Big Six are moving service overseas because they think they might be able to charge higher fares. On the American Airlines schedule next year, for example, is new service to Dublin, Shannon, Nagoya and Osaka. Continental Airlines says it will launch nonstop flights to Hamburg, Bristol, Belfast, Berlin and Stockholm. Delta will add new nonstop flights to Berlin and one-stop flights to Chennai, India. Assuming it makes it to the spring, US Airways will restore seasonal service from Philadelphia to Dublin, Glasgow and Shannon and add flights to Venice and Barcelona. It also claims it will launch service to the Caribbean and Latin America from a new Fort Lauderdale hub. United Airlines, which began flights to Vietnam this month, will add flights to Nagoya.
SKY-TECH: Net Access Is Already Here, Cell Phones Won't Be
All the publicity surrounding the government's "decisions" this week about Internet access and cell-phone usage in the sky obscures two key facts: The Net is already available and there's no chance we'll see in-flight mobile phones for at least another year. The Net first: Connexion by Boeing in-flight WiFi already operates on some Lufthansa, SAS, Japan Airlines and All Nippon Airways flights. Several other international carriers will add the service in 2005. Selected Lufthansa flights from Denver, Charlotte and Los Angeles offer the service, which the German carrier calls FlyNet. The only reason Connexion doesn't operate on domestic U.S. flights is that no Big Six or alternate airline has signed up for the costly installation. … As for the contentious mobile-phone issue, the government ducked it for 2005 by ordering a private study that won't be completed until 2006. But here's an easy compromise that could eventually take shape in a year or two: allowing personal mobile phones to be used only while they are in reach of existing ground-based cell towers. That would impose a de facto limit on usage since ground towers are only in range to about 10,000 feet. It would spare the airlines the expense of adding onboard signal "repeaters" and sidestep the social issues that surround unlimited in-flight cell-phone use.
THE PARTING SHOT: Our Fearless Forecast for 2005 Developments
The Big Six will find still more reasons not to simplify their fare structure even though Delta is boasting about its success with its streamlined fare structure at its Cincinnati hub. … Delta's expansion of Song, delayed in 2004 and now promised in 2005, won't happen. … I don't see how US Airways survives 2005. … And unless US Airways folds early in the year, Independence will have no choice but to ground most of its inefficient fleet of regional jets. … The major hotel families will continue to develop new brands for new niche marketing--or buy up existing smaller chains. … Continuing passenger discontent with security screening snafus and inconsistency will lead to a series of Congressional hearings--but no action to substantially correct the flaws or simplify the process. … The Big Six will demand a bailout after its unprecedented international expansion leads to unprecedented losses. … Domestic hotel rates will continue to rise as Europeans, giddy with their buying power thanks to a weak dollar, fill up guestrooms throughout the nation. … The massive upsurge in flights to Florida will lead to a fare war all through the winter.
This column originally appeared at joesentme.com.
Copyright © 1993-2004 by Joe Brancatelli. All rights reserved.